Washington Post, August 24, 2020 at 2:15 p.m. EDT
New York attorney general files legal action against Trump Organization,
revealing state investigation into the company’s financial dealings
By David A. Fahrenthold
The New York attorney general is investigating President Trump’s private
business for allegedly misleading lenders by inflating the value of its
assets, the attorney general’s office said Monday in a legal filing.
In the filing, signed by a deputy to Attorney General Letitia James, the
attorney general’s office said it is investigating Trump’s use of
“Statements of Financial Condition” — documents Trump sent to lenders,
summarizing his assets and debts.
The filing asks a New York state judge to compel the Trump Organization
to provide information it has been withholding from investigators —
including a subpoena seeking an interview with the president’s son Eric.
The attorney general’s office said it began investigating after Trump’s
former lawyer and “fixer,” Michael Cohen, told Congress in February 2019
that Trump had used these statements to inflate his net worth to lenders.
The filing said that Eric Trump had been scheduled to be interviewed in
the investigation in late July, but abruptly canceled that interview.
The filing says that Eric Trump is now refusing to be interviewed, with
Eric Trump’s lawyers saying, “We cannot allow the requested interview to
go forward … pursuant to those rights afforded to every individual under
the Constitution.”
Many of the details of the investigation were redacted or left out of
the filing. But it mentioned valuations of three Trump properties: a Los
Angeles golf course, an office building at 40 Wall St. and a country
estate called “Seven Springs” in Westchester County, N.Y.
Last year, The Washington Post reported that Trump had inflated the
potential sale value of the Seven Springs property in a “Statement of
Financial Condition” — a type of document he sent to potential lenders
to demonstrate his wealth.
In 2011, Trump’s statement claimed that the property had been “zoned for
nine luxurious homes,” and that the value of those home lots raised the
value of the overall property to $261 million — far more than the $20
million assessed by local authorities. Local officials said Trump had
received preliminary conceptual approval for those homes, but never
completed the process or obtained final zoning permission. The homes
were never built.
The court filing also mentions a question about a loan on Trump’s
Chicago hotel, which one of Trump’s lenders forgave in 2010. The filing
does not say why that forgiven loan is of interest to investigators.
Alan Garten, the Trump Organization’s chief legal officer, said in a
statement that “The Trump Organization has done nothing wrong.” Instead,
he blamed the filing on politics.
The attorney general’s “continued harassment of the company as we
approach the election (and filing of this motion on the first day of the
Republican National Convention) once again confirms that this
investigation is all about politics.”
In its filings, James’s office said it has “not reached a determination”
as to whether Trump’s company violated any laws.
Trump still owns his businesses, though he says he has given day-to-day
control over to his sons.
This is not Trump’s first fight with the New York attorney general. A
previous attorney general, Eric Schneiderman, sued Trump for defrauding
students at his “Trump University,” in a case that led Trump’s school to
pay $25 million to settle in 2016.
Later, the attorney general’s office sued Trump for misusing donations
in his nonprofit, the Donald J. Trump Foundation, to buy art for his
clubs, pay off legal obligations for his businesses and to help his own
political campaign. That suit ended in November, with a state judge
ordering Trump to pay $2 million in damages.
Manhattan District Attorney Cyrus Vance (D) is also leading an
investigation into the Trump Organization.
Vance has subpoenaed the Trump Organization’s longtime accountants,
Mazars USA, for eight years of the president’s tax returns and other tax
preparation documents. Trump sought to block that subpoena, on the
grounds that he was immune to criminal investigation as president. He
lost at the Supreme Court, and now his lawyers are fighting an effort to
block the subpoena on other grounds.
The scope of Vance’s investigation remains unclear. It began with an
inquiry into payoffs made to adult-film star Stormy Daniels — who said
she had an affair with Trump — before the 2016 election. But in recent
court filings, Vance has suggested that he may be looking into financial
practices at the Trump Organization as well.
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